Wednesday, March 16, 2005

Coffee and Cigarettes: Same Owner

Strange to think that Maxwell House is owned by Kraft, which is owned by Altria. Altria? Altria is formerly known as Phillip Morris, the tobacco company that helps 1,200 people die a day in the US from cigarette related deaths. Phillip Morris changed its name to Altria to try and confuse people that is was no longer Phillip Morris.

Will New Machines
Perk Up Coffee Sales?

March 16, 2005; Page B1

Roger Deromedi, Kraft Foods Inc.'s chief executive, works most days next to a row of coffee machines on a table in his office. He likes to test Kraft's newest creation, a coffee "system" called Tassimo, against products from rivals such as Nestlé SA and Procter & Gamble Co. It's become such a pet project for the CEO that Kraft insiders affectionately call him Tassimo's "brand manager."

Mr. Deromedi has good reason for his obsession: Tassimo represents Kraft's answer to a pressing problems confronting one of the world's big coffee sellers -- how to win back American coffee drinkers. Kraft sells more coffee than any other company in the world, and for years, Kraft's Maxwell House brand, along with rival Folgers from P&G, defined America's coffee preferences. But sales of those products, like those of many other iconic packaged foods, are being pinched from below, by low-priced private-label brands, and from above by expensive specialty products sold at chains like Starbucks Corp.

Kraft's Mr. Deromedi figures the way to bring consumers back is to move upscale and sell coffee the same way Gillette sells razor blades and P&G sells Swiffer mops, by hooking consumers on premium-priced refills. The Tassimo machine makes coffee, tea and hot chocolate using only Kraft refills, which it calls "T-discs." So for Kraft, selling the machine means months, if not years, of T-disc sales to come.

Drinking a cup of Tassimo "Voluptuoso" coffee, his favorite variety, Mr. Deromedi muses about the product's potential. "I think we can revolutionize the way people think of drinking coffee at home," he says. The Tassimo machine is perhaps Kraft's most radical innovation since Mr. Deromedi became sole CEO in December 2003. And it's part of a broader vision he has for Kraft, in which proprietary technologies could one day be harnessed to sell products as varied as packaged soups, cold remedies and other drinks. Kraft has about 20 patents protecting the Tassimo product.


balcomb said...

Yes, cigarette companies make a product that kill people. But let's say there weren't any cigarette companies -- impossible! SOMEbody would create one. So PHilip Morris thinks it may as well be them. Alongside cigarettes is Kraft Food. Okay, Kraft is making/selling stuff to KIDS like "Lunchables" (fat content, sodium content, etc. off the charts) and all kinds of awful foods, in addition and feeding America, and its obese population, with all kinds of easy-to-make junk foods -- is that okay because it's not cigarettes? I'm not arguing that cigarettes are good; I'm just curious where one draws the moral line when it comes to capitalism in general. I mean, Tiffany's makes beautiful things -- but it also must excavate diamond mines world wide. Is that better than searching for oil because a diamond ring ends up on your finger and is beautiful (and taking geo-politics out of the picture)? Really, they both destroy the environment for $$.

balcomb said...
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